Post-employment Invention Abuse One of the objections voiced in the testimonies delivered to the Subcommittee dealt with potential abuse of the system by the unscrupulous employee who might withhold disclosure of vital information until his employment terminates, then immediately capitalize on this knowledge - as early as one day after termination of employment. We believe this concern is unwarranted. The courts have always been able to deal with the occasional unscrupulous employee who attempts to profit from an invention belonging to his previous employer. To our knowledge, very few agreements extend beyond the employee's termination date, probably because both the employer and employee recognize that to do so would severely and unfairly limit the ability of the employee to earn a living. A company considering employment of an engineer would think twice about employing him if the engineer were required to assign future inventions to his previous employer. IEEE'S purposes in advocating enactment of HR 3286 are to as clearly as possible separate ownership rights to employment inventions from ownership rights to non-employment inventions. It has never been our intent to eliminate the rights of the employer to inventions which are attributable to employment. The Scope of Assignable Inventions A second major area of concern with HR 3286 relates to the scope of inventions assignable to an employer, such as inventions which are related to the employer's business interests, but which are in areas in which the employee is not directly working. Many engineers, scientists, and other inventive employees work for multidivisional firms and conglomerates. Failure to appropriately restrict the definition of business-related inventions allows the range of inventions claimable by the employer to be unduly broad. Even now the enforceablility of clauses claiming relatively open-ended business interests is questionable. Some firms already voluntarily restrict their claims, limiting them to business areas with which an employee could reasonably be expected to be familiar. HR 3286 embodies this mild requirement in §222 (4)(A), (B), and (C). However, we do not feel that strict adherence to the original language of HR 3286 is necessary, if the concepts embodied are preserved. Therefore, we can accept some of the changes suggested by Mr. Harvey Manbeck, and submitted to the Subcommittee along with his testimony of March 28, 1984, while disagreeing on several others. $222(4)(B) - We do not agree with the recommendation that We have no objections to the other modifications $222(4)(C) - We do not agree with the changes to this section We recommend §222(4)(C) be left unchanged. The Shop Right Doctrine We feel that $223 (a) of HR 3286 properly distinguishes the parameters between the employer and the employee for inventions that are not employment related, but were developed by substantial use of the employer's time, materials, facilities, or funds. In this instance, the conception of the invention is attributable to the innovation of the individual inventor, based on information that is unrelated to the business of the employer. The invention then is physically produced utilizing materials of the employer. We feel that the assignment to the employer of a nontransferable, nonexclusive license to practice an invention is a fair and equitable manner in which to allocate potential rewards from the invention. To insist that such instances be defined as "employment inventions" under §222 (4)(D) broadens existing shop right doctrine and totally fails to recognize the worth of the intellectual conceptions of the employee -- the very innovativeness that needs to be stimulated. We therefore do not agree with the addition of $222(4)(D) and subsequent modification of Section 223(a) as suggested by Mr. Manbeck. §223(b) Mr. Manbeck suggested that the modifications be $223(d) We would suggest that the phrase "... applicable except that it not be required that This would allow the usage of whatever applicable Conclusion Surveys of the IEEE membership indicate that Preinvention Assignment Agreements inhibit innovation and that some 40% of those individuals covered by these agreements are required to assign all inventions to the employer, even those outside the scope of the work they do for the company. This situation is unfair to the affected employees and is a barrier to the creative and inventive spirit needed in the U.S. to remain competitive in the international marketplace. HR. 3286 is a narrow bill that would eliminate this problem to the employee and the barrier to innovation by fairly and equitably defining the scope of permissible preinvention assignment agreements. It unquestionably assigns to the employer those inventions which are "employment inventions", and assigns to the employee those inventions which are outside of these parameters. We do not doubt that disagreements will occur concerning the inevitable gray areas in which a ruling on whether or not an invention is an "employment invention" will be a subjective one. However, HR 3286 will make a major contribution to the equitable distribution of these rights. The issues involved are significant enough that five (5) states have already enacted state statutes, but these are not uniform. Additionally, we are in concurrence with Mr. Manbeck in stating that these have created no perceived adverse effects to industry; however, the proliferation of state laws could create confusion for employees and employers alike who would have to determine their rights under a myriad of differing state statutes. Enactment of equitable Federal legislation would eliminate these difficulties, cause little or no trouble to the affected industries, would eliminate a barrier to innovation and would provide equitable agreements in an area in which experience has shown that equity is seldom obtained voluntarily. to Mr. Chairman, we appreciate the opportunity to review the testimonies of other witnesses before your Subcommittee and to provide you with our perceptions. We found that Mr. Manbeck's method of providing a modified version of the legislation was extremely useful and so we will follow his lead. Attached this correspondence is our own modified version of HR 3286, incorporating some changes that were suggested by Mr. Manbeck. This modified version of HR 3286 is followed by a "clean" version of our suggested paragraph modifications, and a section-by-section summary of our response to the changes recommended by Mr. Manbeck. Thank you very much for allowing us to provide these comments to your Subcommittee, please do not hesitate to contact W. Thomas Suttle in our IEEE Washington Office if we can be of further assistance. To amend title 35, United States Code, to set Federal standards for permissible employee preinvention, and for other purposes. IN THE HOUSE OF REPRESENTATIVES Mr. KASTENMEIER introduced the following bill; which was referred to the I A BILL To amend title 35, United States Code, to set Federal standards for permissible employee preinvention, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That part II of title 35, United States Code, is amended by 4 adding at the end thereof the following new chapter: 5 "Sec. CHAPTER 19-EMPLOYEE INVENTIONS "221. Declaration of purpose and policy. "222. Definitions. "223. Limitation upon terms of an employee preinvention assignment agreement. 6 "8 221. Declaration of purpose and policy 7 "In order to promote the progress of the useful arts, and 8 in order to encourage the free flow of commerce by the cre |